POWELL TELLS CES FCC MUST UNDERSTAND AND PROTECT VoIP THIS YEAR

Parties at all levels of govt. and industry are interested in VoIP, Powell said, and all have different issues that are important to them. He said the FCC had to “demonstrate leadership” on VoIP issues, including “bringing constituencies together and keeping consistency” of regulation across the U.S.: “That doesn’t necessarily mean regulating.”

Powell acknowledged there probably were some areas of VoIP that the FCC must regulate, but said the burden should be on the govt. to prove the need to regulate, rather than on VoIP developers to prove no regulation was needed: “I don’t see why all the telephone economic rules have to apply. This is not just telephony. We could make some very serious mistakes that would take decades to correct if we get them wrong.”

Current telephone rules cover thousands of pages and are based on premises that are 100 years old, Powell said, including telephone monopolies and the concept that each wire would carry only one type of service: “That is garbage.” He said the argument that if VoIP “quacks like a duck” it should be regulated like telephony is “very scary” and the FCC should start with a clean slate. If the U.S. creates a hostile regulatory environment for VoIP, VoIP servers simply will move off shore, where they can’t be reached jurisdictionally, Powell predicted.

On the wider issue of broadband, Powell said the national policy “could be better” for many of the same reasons: “People talk about it like it was telephone service. Wake up!” He called broadband the most dramatic potential stimulus to the U.S. economy and welfare.

Meanwhile, the analog TV spectrum is “desperately wanted and desired by the innovation market,” Powell said. He said Wi-Fi was one of the great recent innovations because it “showed what wireless could do.” He said he now was waiting for someone to use wireless technology to simplify consumer electronics: “I am committed to throwing the wires out of the house.”

Powell said the FCC was committed to providing more unlicensed spectrum: “We are not crystal ball technologists. We have to give opportunity to those who are.” The Commission already has provided unlicensed spectrum, he said, and “this year we will see what else is in the closet,” possibly including spectrum that can penetrate walls better. However, he said some spectrum would continue to need to be licensed, and there must be some rules for the unlicensed field. Powell compared it with a driver’s license and the govt.’s setting speed limits, but not deciding what kind of car one should drive.

Even in unlicensed spectrum, the govt. does “have to protect against interference meltdown,” Powell said. “Smart” devices that adjust to interference can help, he said: “It means we don’t always have to repaint the lanes on the road.”

The DTV transition is nearing the “tipping point” at which consumer and industry takeup accelerates rapidly, Powell said. But he said there still were some challenges, such as DTV must-carry and an agreement on 2-way interactive plug-&-play. CEA Pres. Gary Shapiro, who interviewed Powell, said the CEA believed the “tipping point” already had been achieved.

It was a “banner year” for DTV in 2003, Powell acknowledged. He said the govt.’s role was to “push until we shove DTV to the tipping point.” After that, he said, the FCC’s role will be very limited: “We will stay vigilant and dynamic, but we're not the ones doing it [the DTV transition].” One of the greatest challenges for the industry is eliminating consumer confusion, particularly over standards and types of receivers, Powell said. He said he assumed that one type of DTV receiver would “break out of the pack” eventually, and that would simplify decisions for consumers.

In response to a question, Powell said the Berlin experience might have some lessons for the U.S., but said he doubted Congress would appropriate money to subsidize buying DTV receivers for poorer people. The govt. of Berlin was able to cut off analog broadcasting last summer by subsidizing DTV converter boxes. Powell acknowledged he “would love to see” such an accelerated transition because it rapidly would free analog TV spectrum for other uses.

Intellectual property (IP) issues will continue to be controversial as long as new products are being introduced, Powell said, but the FCC “can’t act like this is something they've never seen before.” He cited the IP issues raised by copy machines and the VCR: “Digital means a much better copy machine, but the fundamental issues are the same.”

The FCC will remain involved in plug-&-play issues because, like it or not, “the DTV transition is government industrial policy,” Powell said: “So a lot of issues become government issues in order to make the transition work.” He said the industry agreement on one-way plug-&-play was “terrific, but the work is by no means done.” Powell said the various industries should get as much agreement as possible because that would narrow the issues the FCC must deal with, resulting in faster and more effective regulation. If industries don’t agree, he said “relying on a public policy power struggle is dangerous.”

The FCC has held off on a DTV must-carry decision partly in the hope that the cable and broadcast industries would reach agreement, Powell said, but time is running out: “Having an answer on must-carry is important.” He said industries had been less successful agreeing on DTV must- carry than on plug-&-play: “At some point we [the FCC] will have to barrel forward.” -- Michael Feazel

CES Notebook…

Verizon’s broadband initiative is a step toward an “all broadband all the time life-style,” Verizon Chmn. Ivan Seidenberg told the CES, hours after his company announced a $1 billion commitment to wireless broadband (CD Jan 9 1p). He said the industry was “at the beginning of a communications revolution,” as evidenced by the devices at the show: “Clearly we have only scratched the surface in the enormous shift in the way we communicate.” The goal, Seidenberg said, is 100 Mbps everywhere. Verizon expects “thousands” of new applications and devices to emerge from wireless broadband, some from Verizon, some from consumer electronics manufacturers, but “many from our customers,” he said. Seidenberg said govt. had “done a pretty good job” with wireless by “pretty much staying out” of it: “Government can take another big step by clearing the way for broadband.” He said that would “put the U.S. technology industry back in the driver’s seat.” -- MF ----

Sprint’s new technologies mean “multiple opportunities” for the carrier, including such things as location-based services and voice control systems, Chmn. Gary Forsee said in a CES keynote. In a presentation that was much like a 35- minute commercial for Sprint, including Sprint’s TV spokesman, Forsee said the key questions for long-term success included: Has the firm thought about the customer? Will it deliver value at a fair price? Can the new product be integrated with existing devices or services? Is it easy to understand, use and fix? Will customers be trading up too fast? ----

The FCC and NTIA “did an unbelievable job” in clearing the way for ultrawideband (UWB), and the first products will be on the market this year, XtremeSpectrum CEO Martin Rofheart said in a wireless “supersession” here Fri. Reflecting the increasing importance of wireless at the CEA, the session featured standing room only and one of the longest lines to get into the room. Despite the regulatory progress on UWB, Rofheart said, industry standards still are not mature: “There’s still a lot of heavy lifting to do.” As a result, he said, most products will start emerging in 2005 and 2006. Camera phone sales have outstripped DVDs as the fastest-selling consumer electronics product ever, industry officials said, and most touted that and camcorder phones as their big new product lines. However, the market may not yet be ripe for high-speed wireless services like those Verizon just announced (CD Jan 9 p1, said Len Lauer, pres. of Sprint PCS and COO of Sprint. Since the service is realistic now only for laptops, not mobile phones and PDAs, because of cost, Lauer said Sprint couldn’t see a business model for it. He said Sprint had the basic network in place and access to capital to begin high-speed wireless, but he didn’t believe the technology would advance enough to allow low-cost service to phones and PDAs for about 2 years. Disney Internet Group, meanwhile, is accelerating its offerings of downloadable video and other content for mobile phones in both Japan and the U.S., Group Pres. Steve Wadsworth said. He said Disney had 3.7 million paying subscribers for such content in Japan and “I see it starting in the U.S. All the pieces are coming together.”